The clashes in Laghouat began in the morning "when the population responded to provocations by members of the security forces who insulted elderly people who were waiting for a bus," said a representative of the National Coordination for the Defence of the Rights of the Unemployed (CNDDC), Abbes Hadj Aissa.

At least 10 people were injured in the ensuing clashes, he said, adding that people in this town of some 500,000 kept their curtains drawn as a mark of protest.

Security forces arrested an unspecified number of demonstrators, the Algerian League for the Defence of Human Rights (ALDHR) said.

Laghouat is near Algeria's most important natural gas field in the Sahara.

The rights group claimed police had beaten several people and used tear gas in a "violent" action on demonstrators, though the town was calm by evening.

The ALDHR said in a statement that protesters were particularly angry over Algeria's housing crisis and accused local officials of favouritism in how subsidised homes are allocated.

President Abdelaziz Bouteflika has promised more than one million new affordable homes in a five-year plan ending in 2014, but the process is rife with allegations of corruption and the pace of building is slow.

Protesters first targeted Laghouat on Sunday after hundreds of unemployed people complained about workers from outside the region getting jobs at the gas fields of Hassi R'mel.

Abbes Hadj Aissa, a representative of the National Coordination for the Defence of the Rights of the Unemployed (CNDDC), said most stores except bakeries were closed in solidarity with the protests.

In Algeria, the unemployment rate among young people, which reached 50 percent 10 years ago, is about 21 percent, according to the latest statistics International Monetary Fund statistics.

Laghouat is located some 400 kilometres (248 miles) south of Algiers.

Unemployed people have demonstrated in other oil towns for several days.